My most recent books are the Leader's Guide to Radical Management (2010), The Leader's Guide to Storytelling (2nd ed, 2011) and The Secret Language of Leadership (2007). I consult with organizations around the world on leadership, innovation, management and business narrative. At the World Bank, I held many management positions, including director of knowledge management (1996-2000). I am currently a director of the Scrum Alliance, an Amazon Affiliate and a fellow of the Lean Software Society. You can follow me on Twitter at @stevedenning. My website is at www.stevedenning.com.

Bursting The Defense Bubble: End The Entitlement Mentality

Along with the growth in health care spending, growth in defense spending is one of the principal causes the alarming budget deficit of the U.S.

In an earlier post, I noted obvious misapplication of effort and expenditure in the system with which we are all uncomfortably familiar—airline security at airports. The system pursues the illusory objective of keeping off planes anything that could be used as a weapon, when there are items already on the plane accessible to passengers that could be used as a weapon. As I noted there, the system is solving the wrong problem. A more appropriate system would aim principally at keeping terrorists off planes.

The airline security system at some $8.1 billion in 2010 is however a mere drop in the ocean of total defense spending of $685 billion, and growing fast.

It is therefore reassuring to read in Gene Epstein’s insightful article in Barron’s this morning a modest proposal of a $1.6 trillion 10-year cut which would reduce US Base Military Spending to its inflation-adjusted 2000 level. The proposal endorses the recommendations of Winslow T. Wheeler of the Center for Defense Information, a nonprofit, nonpartisan research organization. (Base spending doesn’t include the allocations for the wars in Afghanistan and Iraq.)

Barron’s also recommends a recently published book The Pentagon Labyrinth, written by military men. It paints a portrait of bureaucracy run amok.

Like all government agencies and public corporations, the Pentagon is legally required to submit to a yearly audit that connects its spending to its allocations. But in defiance of the law and the Constitution (Article I, Section 9), the Pentagon has never been audited. Therefore, the authors assert in their letter, it “cannot track the money it spends…does not know if it has paid contractors once, twice, or not at all…[and] does not even know how many contractors it has, how many they employ, and what they are doing.”

Given the Pentagon’s freedom to operate without financial accountability, it keeps requisitioning ever more complex weapons that cost “three to ten times more to buy and operate” than those being replaced. This complexity, the authors argue, actually makes our troops less effective. Its aim is to justify ever-rising bills from the contractors, not give our Army, Navy, Marines and Air Force an edge. The overriding need, then, is for the Pentagon to be audited to find out how it does spend taxpayers’ money.

It is hard not to suspect like Congressman Barney Frank, D-Mass, writing in February 2009 that much of the spending concerns “weapons systems that have no justification from any threat we are likely to face.”

It is shocking to realize that even “with the U.S.S.R. gone, the U.S. is still spending $6.8 billion a year to keep troops in Germany. And a combined $8.2 billion annually to station troops in Japan, Italy and the U.K.“

Defense becomes an entitlement

Barron’s notes that “A 2000-level budget would still be much larger than the highest estimates for the combined current military spending of any country or group that realistically could be America’s enemy, including China, Russia, Iran, North Korea, Cuba and al Qaeda. Even that calculation assumes that all these forces would be united against America in a future conflict. “

A curious feature of the military’s efforts to defend the high levels of expenditure is that they are based not on any rational case of actual or imagined enemies that the US would have to fight, but rather on entitlement.

Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff in 2007 called four percent of GDP an “absolute floor”. On this reasoning, if the US GDP goes up by 20%, defense spending would go up by a minimum of 20%, even if the actual threats represented by real enemies declines. In other words, defense spending has nothing to do with actual defense. It has become an entitlement.

An equally weird argument comes from Republican historian, Robert Kagan, has argued that defense spending must be maintained to convince our allies that America is not in decline. “The announcement of a defense cutback would be taken by the world as evidence that the American retreat has begun.” Again, the argument to maintain levels of spending has nothing to do with actual defense against actual enemies: it’s essentially an elaborate public relations exercise.

In other words, we don’t have a Department of Defense. We have a Department of “Defense”.

A parade ground military

Yet the Barron’s proposal only deals with Base Military Spending,which amounts to $550 billion and doesn’t include allocations for the wars in Afghanistan and Iraq.

What do we get for $550 billion? Apparently, only a parade ground military. As analyst “Werther” notes:

$550 billion, give or take, is what is required simply to sustain it in garrison and have the Blue Angels perform the requisite number of air shows during a year. Should we ask it to do anything, even merely adjust its normal deployment schedules to sail down to Haiti and deliver supplies, that costs a billion or two extra. Actual wars, needless to say, cost hundreds of billions extra. Imagine a fire department that charges residents a premium every time its fire engines leave the station house, and you have understood the U.S. military.

A garrison atmosphere

In a recent radio interview, the British historian Timothy Garton Ash stated that Washington, D.C., he said, reminded him of

“Moscow in the former Soviet Union. …Washington is remarkably like late-Brezhnev era Moscow in the sense of being very visibly the capital of a garrison state. With its billboard adverts for fighter aircraft in local Metro stations, radio spots recruiting for “the National Clandestine Service,” its ubiquitous Jersey Wall checkpoints, and its electronic freeway signs admonishing motorists to report suspicious activity (whatever that may be), the District of Columbia quite accurately simulates the paranoid atmosphere of a cold war era capital of Eastern Europe, say, East Berlin or Bucharest, albeit at two orders of magnitude greater cost.

Few benefits go to front line troops

Few would begrudge all this largesse if it were bestowed on the courageous fighting men and women who are risking their lives on the front lines. The reality is that most of benefits are used to prop up the profits of defense contractors far from any front lines, often working on systems that will never be completed or built, let alone ever deployed.

In other words, the “Defense” budget is a giant subsidy or bubble benefiting firms that don’t have to worry too much about global competition. If by accident a foreign firm wins a major contract, politicians can be mobilized to reverse the decision and bring home the bacon, as when Chicago-based Boeing bested European Airbus to build a fleet of 179 aerial refueling tankers at a cost of $35 billion.

The “Defense” budget is also held in place because contractors have deliberately placed their facilities in multiple states and congressional districts, so that if there is any risk of the “Defense” budget being cut, the relevant representatives in Congress rise up in protest to cuts in spending in their district, regardless of the spending’s relevance to actual defense. Once again, we are dealing with “Defense” spending, not spending to protect the nation’s actual defense.

The need for a systemic solutions

“[T]here is a path,” write Wheeler and his colleagues, “that meets the goals of deficit reduction and strengthens real national defense.” Following their suggestions would, writes Barron’s, put the country on that path.

But getting on that path is not enough. As my colleague and commentator, Fernando J. Grijalva, has noted, these kinds of problems are systemic problems

“composed of multiple systems of interacting problems and they are very difficult to solve/dissolve. In order to understand these problems, one needs to apply theory of systems to improve understanding of their purpose, components, interactions, environment, stakeholders, constraints, boundaries, etc…Albert Einstein’s advice is valuable in this context. ‘The significant problems we have cannot be solved at the same level of thinking with which we created them.’”

Spending on “Defense” is held in place by a set of attitudes and practices of the military, the politicians and the defense contractors. It is virtually impervious to any possible questioning. While not being very efficient in defending against actual enemies, it is very effective in defending its own funding. We are faced with a bubble of self-perpetuating hierarchical bureaucracy.

Therefore no single measure or action will change the current situation. Instead, there needs to be a radical change in the way we think, speak and act about defense. We must set aside the assumption that anything labeled as defense necessarily has anything to do with actual defense, as opposed to “Defense”. We must begin the hard work of radically rethinking: who are enemies are, what kind of threats do we really face and what kind of actions are necessary to defend against them.

[i] Even Mullen’s four percent floor does not take into account some other defense-related non-DOD spending, such as Veterans Affairs, Homeland Security, and interest paid on debt incurred in past wars, which has increased even as a percentage of the national GDP.

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Defense and infrastructure are two of the only things the Federal Government should be covering. A good 20% decrease could be used and European bases could be closed. The Founding Fathers meant to keep us protected and not for the government to be a healthcare provider. 20% cut to Defense. Complete cut to any healthcare programs including Obamacare, Medicare, Medicaid, and even Welfare and SS need to go.

Thanks for your comment. I wonder about the political feasibility of complete cuts to everything. I suspect that rigorously examining whether expenditures are actually accomplishing the goals that they are ostensibly aimed at, very substantial savings are possible as well as improved effectiveness. Throwing money or technology at problems doesn’t necessarily solve them. “Defense” is not defense.

There are those in American politics that have absolutely no ambition to “Fix” anything. They are politicians… they dont believe… and least of all admit that they could possibly be part of something so incredibly broken. Politicians are liars… cheats… its the definition of American politics. When constantly in “Deception” mode… what incentive is there to do the right thing??

Thanks for your comments and the question. There may be no “incentive to do the right thing”. But the right thing remains the right thing to do, incentive or not. That’s what we mean by “the right thing.” If people are looking for incentives, they are already addressing the wrong question.